Populism takes spotlight in Romania power struggle

BUCHAREST (Reuters) - On a sunny October day, Dan Diaconescu arrived at Romania's economy ministry with seven bags stuffed with 3 million euros in cash to pay workers' overdue wages at a chemical plant.

The government turned down the money but the stunt served its purpose for the media tycoon, raising his electoral profile along with nightly self-promoting appearances on his own television channel, calling himself "Romania's next president".

Promising steep tax cuts, his populist party may hold the balance of power after a December parliamentary election. That would set up weeks of horse trading which could raise questions over an International Monetary Fund deal and undermine Romanian markets.

"Once in power we will make things right. We will have bread, glass and brick factories like in the old days," Diaconescu told voters in the impoverished mining town of Targu Jiu, where he is standing for parliament.

Romania joined the EU in 2007 but its chaotic politics have brought into question whether it is fit to be part of the block. It remains a second-tier member - excluded from the passport-free Schengen zone and its justice subject to monitoring.

Its leftist government, led by Victor Ponta, is favorite to win the election and may well secure an outright majority. But its credibility is damaged abroad after a failed attempt to unseat President Traian Basescu, who is deeply unpopular due to his links to austerity and perceptions of cronyism.

If parliament is split then Diaconescu, whose party has poll ratings of about 14 percent and turns 45 on the December 9 election day, becomes the likely kingmaker.

Both main parties - Ponta's Social Liberal Union (USL) and the Basescu-allied Romania Right Alliance (ARD) - have committed to work with international lenders, but Diaconescu's policies will alarm the IMF, which leads a 5 billion euro deal that shores up investor trust.
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